Overbought/Oversold Readings
November 14, 2008
Here are the overbought/oversold numbers as we head into the weekend. Next week brings options expiration and I think we could in store for a doozy. Anyway, I will save my commentary for the Weekend Report due out Sunday.
Until then, have a wonderful weekend. Life is good!
Andy
Overbought-Oversold levels for November 14, 2008
ETF Extremes Options Trading Strategy
* S&P 500 (SPY) - 36.6 (neutral)
* Dow Jones (DIA) - 38.7 (neutral)
* Russell 2000 (IWM) - 34.6 (neutral)
* NASDAQ 100 (QQQQ) - 31.6 (neutral)
Sector ETF Extremes Options Strategy
* Biotech (IBB) - 45.2 (neutral)
* Consumer Discretionary (XLY) - 41.2 (neutral)
* Health Care (XLV) - 35.9 (neutral)
* Financial (XLF) - 34.1 (neutral)
* Energy (XLE) - 46.8 (neutral)
* Industrial (XLI) - 36.2 (neutral)
* Materials (XLB) - 36.2 (neutral)
* Real Estate (IYR) - 35.0 (neutral)
* Retail (RTH) - 36.2 (neutral)
* Utilities (XLU) - 51.9 (neutral)
Ultra Extremes (Insiders Page Only)
* Ultra Long (SSO) - 36.3 (neutral)
* Ultra Short (SDS) - 56.8 (neutral)
If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.
Classic Washout - Where Now?
November 13, 2008
Could today be the intermediate-term low that we have all been seeking? It certainly felt like a day of capitulation. One thing is certain, what we did get was a fake breakdown. The futures pointed towards a breach of the October lows and after a brief rally (if you can call it that) the bears took control and moved the market decisively lower. The move lower lasted until around 1pm EST (after almost all stops were taken out, convenient eh?) and then quickly rallied to close near the highs of the day and the buying demand was legitimate as we moved past several important areas of overhead resistance.
The question is now, will this rally continue? If you have been reading my blog recently you certainly know my opinion. All of the intermediate-term indicators are pointing towards a rally that lasts until the New Year. Seasonality is very strong in the 4th quarter and the “big boys” need to finish the year on a strong note and believe me they have the power to do so. I will talk about the classic washout that occurred today in much greater detail in the upcoming Weekend Report.
I do think that once we hit a short-term overbought state that we will see a short-term (1-3 day) pullback and that is exactly what I will be looking for in the ETF Extremes and the Sector ETF Extremes.
Until then I will be patiently waiting on the sidelines.
Have a great night!
Overbought-Oversold levels for November 13, 2008
ETF Extremes Options Trading Strategy
* S&P 500 (SPY) - 48.9 (neutral)
* Dow Jones (DIA) - 51.2 (neutral)
* Russell 2000 (IWM) - 49.4 (neutral)
* NASDAQ 100 (QQQQ) - 47.1 (neutral)
Sector ETF Extremes Options Strategy
* Biotech (IBB) - 57.9 (neutral)
* Consumer Discretionary (XLY) - 45.0 (neutral)
* Health Care (XLV) - 57.6 (neutral)
* Financial (XLF) - 42.0 (neutral)
* Energy (XLE) - 55.1 (neutral)
* Industrial (XLI) - 47.2 (neutral)
* Materials (XLB) - 48.0 (neutral)
* Real Estate (IYR) - 47.4 (neutral)
* Retail (RTH) - 51.5 (neutral)
* Utilities (XLU) - 60.5 (neutral)
Ultra Extremes (Insiders Page Only)
* Ultra Long (SSO) - 47.6 (neutral)
* Ultra Short (SDS) - 45.9 (neutral)
If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.
Early and Out - Another Trade Tomorrow?
November 12, 2008
As I write this QQQQ is down $.50 from the close. Keep this in mind as you read the following post.
Today was one what we call a trend day. The market bled lower all day long to close at the lows of the day.
It was unfortunate for our flagship strategy, the ETF Extremes Options Strategy, because I entered into a trade around mid-day only to be stopped out at the very end of the day. Moreover, even though my hunch (and many of the technical indicators I follow) tells me that we are going to see a rally over the short-term (1-3 days) I did not think that the risk-reward warranted holding onto the trade given the market moving news (retail, etc) that is due out tomorrow.
As I stated in the closing trade alert, “as I always preach, risk management is the key factor to any successful trading strategy.” Losses are inevitable and it is how one handles a loss that separates a good trader/strategy from a bad one. Any trader can do well in a bull market. I can’t tell you how many people I know that have strategies that have blown up because they are stubborn bulls or bears for that matter.
Anyway, I was able to minimize the loss from 7.9% to 9.3% depending on your autotrade broker executions. Of course, on my performance page I report the worst case scenario or 9.3%.
At the end of the day Jan09 calls (QAVAC) were trading for $2.50 or roughly 5.2% lower than my closing price so if there was a silver lining to today’s trade that was it.
The ETF Extremes Strategy is still outperforming the market by a substantial margin over the last three years. If one had started with $5,000 they return would be well over 200% and that includes monthly subscription costs and commissions.
As you can see from my past track record on the performance page of the website (on the right sidebar of the homepage) I take risk management very seriously. I abide by my trading guidelines and the stated stop-losses that I mention in my e-book. This is why the ETF Extremes has outperformed most other options-based strategies over the long-term (as reported by pro-trading-profits) and this is why the likelihood of the strategy is far less than most other options or stock-based strategies for that matter.
We are here to learn how to be better traders/investors. Winning is easy. Every yahoo out there touts his wins and how great his strategies are win they are up, but I challenge you to find newsletters that try and mention the losers. In my opinion, losing trades are far more important to a strategy. This is how we learn.
Anyway, with the market in an oversold state, I would not be surprised to see another ETF Extremes and Sector ETF Extremes soon, possibly as early as tomorrow. This has not happened since the initial days of the strategy and I am not guaranteeing that a trade will occur, but subscribers, I just want you to be aware of the possibility.
I hope all of you have a wonderful night and take care.
Andy
Overbought-Oversold levels for November 12, 2008
ETF Extremes Options Trading Strategy
* S&P 500 (SPY) - 22.4 (oversold)
* Dow Jones (DIA) - 28.4 (oversold)
* Russell 2000 (IWM) - 22.1 (oversold)
* NASDAQ 100 (QQQQ) - 22.4 (oversold)
Sector ETF Extremes Options Strategy
* Biotech (IBB) - 30.2 (neutral)
* Consumer Discretionary (XLY) - 21.3 (oversold)
* Health Care (XLV) - 26.1 (oversold)
* Financial (XLF) - 23.0 (oversold)
* Energy (XLE) - 30.1 (neutral)
* Industrial (XLI) - 25.3 (oversold)
* Materials (XLB) - 23.1 (oversold)
* Real Estate (IYR) - 26.2 (oversold)
* Retail (RTH) - 24.1 (oversold)
* Utilities (XLU) - 34.9 (neutral)
Ultra Extremes (Insiders Page Only)
* Ultra Long (SSO) - 24.8 (oversold)
* Ultra Short (SDS) - 73.0 (overbought)
If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.
